Survival Story: Former Business Owner Overcomes Devastating Setbacks

Published in Senior Digest, April 2016

If you are in pursuit of the American Dream, you probably weren’t given a roadmap that would guarantee a successful journey. Ask the average man or woman on the street today what immediate thoughts come to mind about owning your own business, and you’ll probably hear ‘being your own boss’, and ‘working your own hours’ that top the list of perceptions. But when opening your own business becomes the alternative to unemployment in your later years, as Donald, Russell, Jr. found out, it may not be what you expected or even planned. Like millions of middle-aged workers in the early 1990s, a severe economic downturn forced this Central Falls resident to make choices that ultimately would financially hit his pocketbook as he approached retirement.

Donald Russell had worked his way up from stock boy to manager at F.W. Woolworth Co., one of the areas original five-and-dime stores. During his 33 year career with this large big-box retail company, what was at the time the fourth largest retailer in the world operating over 5,000 stores, he eventually managed seven of the retail company’s stores, one located in Providence (at Westminster and Dorrance Streets), and the others in Massachusetts, Vermont and New York.

But everything changed in the late 1990’s, and this 117 year old company struggled to compete with the growing big discount stores. F.W. Woolworth filed for bankruptcy protection, and Russell, facing unemployment, had to quickly make major career decisions. He knew that, “at age 52, big box competitors don’t want you,” or if he was offered a position, the salary would be much lower than what he was used to. “I could not take less because I had to pay for my daughter’s college education,” he added.

Russell credits “courses he took at Boston College” for teaching him valuable lessons on how to open a small business, and with knowledge in hand, he was ready to take that leap of faith and open his own business. . Russell decided to cash out his $80,000 pension (less penalties) and combined with a loan from U.S. Small Business Administration, he would have enough capital to open a small retail business.

Getting into the Pet Business

Russell spent time researching a market niche, searching for one that would not put him in direct competition with the chain store. He discovered that the pet business was not really sought after by “big box retailers” and at that time “there were only 30,000 pet stores throughout the country. Today the number has decreased to 6,000.” Now . Russell found his niche, and in 1997 opened his business “Dr. Doolittle’s Pets & More”, a small pet store in an East Providence shopping plaza. Though situated between two large Petco stores – one in Rumford, RI and the other in North Attleboro, MA., Russell did not view the large chain stores as competition, for he knew his prices were better. In 1997 when Russell opened his store, small business accounted for about 85 percent of the nation’s economy, he states, noting that today this percentage has dropped to 70 percent.

Business was strong when Dr. Doolittle’s first opened and for over 13 years, Russell employed seven full and part time employees. However, by 2004 “the economy began to take a dive” and juggling the monthly rent, utilities and employee salaries became difficult when his cash flow slowed. Russell began to loose money.
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By 2006 his revenue had dropped 30 percent from the previous year, and neighboring big stores located in the plaza, like Ocean State Job Lot, began to close. In an effort to trim expenses, Russell was able to renegotiate his rent to a lower amount, however “losing the Stop & Shop Supermarket in the next plaza, which was a main draw to the area, “was ultimately the straw that broke the camel’s back”.

Taking from Peter to Pay Paul

Like thousands of small business owners in the Ocean State, Russell had to juggle each month to meet his expenses, which included his RI sales tax. Choosing to pay his monthly sales tax or paying his employees salary was not an easy choice to make, but he could not pay both. “I chose to pay my employees” first, with the plan to make up my [delinquent] sales tax later” he stated, noting however, that the “economy put the brakes to that”. “I could not even borrow a dime even with an excellent credit rating of 750,” added Russell. The poor economy had forced banks to cut off credit to small businesses – period.

In 2009, the Rhode Island Department of Taxation came knocking on his door, and the now 65-year-old pet store owner was forced to close his business because he was in arrears on his payment of sales taxes. While his business was his sole-source of income, the forced closing of the business put him in a ‘catch 22’ situation – blocking any attempt to rescue his business and pay off the remaining sales tax owed, which had now grown to thousands of dollars. Rather than padlock the door, the State did allow him access to the store to feed and maintain the animals until other arrangements were made.

Two weeks after his closing, Russell hammered out an agreeable payment plan with the State of RI for back taxes, but the economy never recovered, and by September, 2010 the doors closed for the final time. In a valiant effort, Russell paid off $18,500 of the $20,000 owed before he closed, but two years later to his surprise, he was blocked from registering his car because of the remaining taxes (and penalties) still owed. A dispute as to the amount of sales taxes (plus penalties and interest) paid ultimately ended with the state’s tax agency backing off and allowing him to register his vehicle.

Russell’s forced closing and ultimately his bankruptcy caught the eye of both statewide and national media. Two radio talk shows and television coverage brought the news of his closure to the public. Even the nation’s most popular Web site, “The Drudge Report,” posted articles. Amazingly, he says that over 100 pages of blog posting were also generated, too.

Making Ends Meet

Today, Russell, 72, is collecting Social Security supplemented by a part-time job delivering pizzas. He notes that beneficiaries will not receive cost of living this year. Like millions of Social Security beneficiaries, Russell feels the impact of inflation. “There is no extra money to buy groceries after paying my rent and utilities,” he says. Local food pantries provide additional food and the Pawtucket-based Blackstone Valley Community Action Program pays for some of his heating bills.

Reflecting on the lay off in his fifties that led to the opening of his small business and ultimately its closing as he reached his mid-sixties because of an ailing economy, Russell admits he did not have a strategy for getting through the tough times in his later years.

“I just coped,” says Russell. The former business owner has a strong opinion on opening a small business in Rhode Island. “Never,” he says. .

Social Security Gets Attention at Debate

GOP Candidates Share Their Plans for Shoring Up System’s Solvency

Published in Woonsocket Call on March 12, 2016

Last Thursday, the four surviving G0P contenders for president at the CNN Republican debate at the Bank United Center on the campus of the University of Miami, focused on meaty policy issues and not theatrics. Previous debates were heated and sparks flew between candidates. But many political wonks consider this one to be subdued, may be even a little boring. Like the other 11 debates, on March 10 Ohio Governor John Kasich, Senator Ted Cruz of Texas, Businessman Donald Trump and Senator Marco Rubio of Florida, gave their two cents on scores of policy issues including, the right to bear arms, trade, jobs, illegal immigrants, education, national security, fighting ISIS, Iran’s nuclear deal and protecting Israel. But one political hot potato issue, Social Security, even got a little more air time during this debate.

With Florida having the highest percentage of retirees in the country, with nearly 3.1 million residents receiving a Social Security check, CNN Chief Political Correspondent Dana Bash, brought Social Security into the debate by asking the candidates how they would keep the nation’s retirement program afloat for future generations.

Bash called on Rubio to explain his position on rising the retirement age and reducing benefits for wealthy retirees. The Florida Senator said he would not cut Social Security checks, joking that “I’m against any changes to Social Security that are bad for my mother, a Social Security recipient.”

Younger Generations Take Brunt of GOP Fix for Social Security

Rubio warned that Social Security will ultimately go bankrupt taking the country down with it. So, here’s his fix. “So what it will require is people younger, like myself, people that are 30 years away from retirement, to accept that our Social Security is going to work differently than it did for my parents,” he noted.

The 44- year-old Florida Senator, called for increasing the retirement age of younger persons to age 68 ultimately to age 70, suggesting that Social Security checks should not “grow as fast as someone who made less money.”

“Medicare could very well become the option of using my Medicare benefit to buy a private plan that I like better. Medicare Advantage does that now,” said Rubio.
Explaining what he favors making changes to Social Security, Rubio noted that “in less than five years, only 17 percent of our budget will remain discretionary; 83 percent of the federal budget in less than five years will all be spent on Medicare, Medicaid, the interest on the debt.”

CNN moderator Bash called on Trump to explain why he did not want to raise the Social Security retirement age and his rationale for not wanting to cut benefits to wealthy retirees.

Trump responded by saying that his democratic opponents oppose cutting the retirement program, evening wanting to give recipients “even more.” The businessman, becoming more of a politician, clearly sees how the heated political issue, of making changes to Social Security, will bring votes to the Democrats. ”And that’s what we’re up against. And whether we like it or not, that is what we’re up against,” he says.

“I will do everything within my power not to touch Social Security [either making benefit cuts or rising the eligibility age”. Trump believes the solution is “to make this country rich again; to bring back our jobs; to get rid of deficits; to get rid of waste, fraud and abuse, which is rampant in this country.” He notes that catching improper retirement payments will also increase the solvency of the program.

Time Can Allow a Fix for Social Security Program

In response to those warning about the impending bankruptcy of the Social Security program if changes are not made, Trump says he would have a “a long-time to go,” possibly over 20 years, to increase the solvency of the program. It seems that he does believes that time will be on his side to fix Social Security, if he becomes president.

“The numbers don’t add up,” charges Rubio, to Trump’s assertion that reducing fraud and waste and in Social Security, the nation’s foreign aid programs and better purchasing policies. He chides both the Democrats and GOP for taking too long to “deal with” the solvency of Social Security.

With the spotlight on Cruz, the Texas Senator explained his advocacy for allowing younger workers to put some of their Social Security taxes into a 401 (k) accounts even with the

As president, Cruz pledges that he will not make any changes to Social Security that will impact anyone at or near retirement. “Every benefit will be protected to the letter,” he says, “But for younger workers, we need to change the rate of growth of benefits so it matches inflation instead of exceeding inflation.”

Finally, CNN moderator Bash, reminded Kasich of his position of cutting retirement payments. The Ohio Governor told a New Hampshire voter: “Get over cuts to Social Security benefits,” he says.

Kasich brought up his 1999 plan to save Social Security by allowing young people to have private retirement accounts. During a light hearted moment, Kasich quipped this memorable quote: “Now there are more 18-year-olds who believe they have a better chance of seeing a UFO than a Social Security check and we have a lot of seniors who are very nervous.”

Kasich’s plan to save Social Security is quite simple. “If you’ve had wealth throughout your lifetime, when the time comes to be on Social Security, you’ll still get it. It will just simply be less. And for those people who depend on that Social Security, they’ll get their full benefit. That’s the way it will work. And we don’t have to monkey around with the retirement age. And how do I know that? I’ve done all this before,” he told millions watching the two hour debate.

The writing is on the wall. 2016 GOP candidates for president, except Trump, look to make changes to Social Security to ratchet up the program’s solvency. Those calling for change say they won’t increase program eligibility, cut benefits or privatize the program, to impact aging baby boomers nearing retirement or for current Social Security recipients.

While differing on their political strategies, Democratic presidential contenders — former Secretary of State and New York Senator Hillary Clinton and Senator Bernie Sanders, — seek to strengthen and expand Social Security.

Generation’s X, Y and Z might will consider looking closely at Democratic and Republican presidential candidate positions on fixing Social Security. November’s winner might just tinker with your future retirement program or slash benefits, ultimately impacting how you will financially survive in your retirement years.

Candidates Mum on Social Security

Published in Pawtucket Times on February 8, 2016

Just a week before the New Hampshire primary, scheduled for Tuesday, February 9, AARP releases a new survey, of likely primary voters, that finds Social Security is “one issue that transcends the partisan divide and unites people of all ages.” Both surveyed Democrats and Republicans alike agreed that all presidential candidates should give details as to how they will strengthen or expand Social Security.

In recent presidential debates, moderators focus on the economy, abortion, gun control, immigration and defense, hardly touching on aging issues. The January 29 AARP survey found that voters want more specifics about Social Security. More than nine in 10 New Hampshire primary voters across party lines and age groups say it is important for presidential candidates to lay out their specific plans to make Social Security financially sound for future generations.

Presidential Candidates Dodging Social Security Issue

“New Hampshire primary voters are sending a clear message to the presidential candidates that having a plan to keep Social Security strong is a test of leadership,” said AARP New Hampshire State Director Todd Fahey. “Yet, some presidential candidates are dodging the issue. Our survey confirms New Hampshire primary voters agree if a candidate thinks they’re ready to be president, they should at least be able to tell voters where they stand on Social Security’s future.”

According to AARP, the recent survey of 1,004 likely New Hampshire primary voters, was conducted by telephone from January 12 through January 16, 2016. By design, half of the respondents consist of likely Democratic primary voters (501) and half consist of likely Republican primary voters (503).

The AARP survey is part of nonprofit’s 2016 presidential election issue campaign, “Take A Stand.” In November, the nonprofit launched its its 2016 election accountability campaign initiative which demands on behalf of America’s voters that presidential candidates detail their specific positions on making Social Security financially sound.
The survey findings indicate that nine in 10 New Hampshire primary voters (93 percent Democrat and 92 percent Republican) across party lines and age groups say its important for presidential candidates to lay out a detailed plan to make Social Security financially sound for future generations. Regardless of age, nearly half or more of likely primary voters in each party think this is “very important.”

Also, more than three in four New Hampshire primary voters, across party lines and across age groups, agree that having a plan for Social Security is a basic threshold for presidential leadership. This includes 89 percent of likely Democratic primary voters and 80 percent of likely Republican primary voters.

Moreover, nearly nine in ten or more voters across both parties and age groups believe it is important that the next president and congress take action to make Social Security financially sound. This includes 96 percent of Democratic primary voters as well as 92 percent of Republican primary voters.

“If our leaders don’t act, future generations could see their Social Security benefits cut by 25 percent. That’s a $4,000 to $10,000 per year benefit cut! This survey confirms how critical it is for the next president to have a plan to update Social Security and a commitment to act on that plan,” said Fahey.

On the question of which presidential candidate they expect to vote for on February 9, the AARP survey found that among likely Republican primary voters, Donald Trump is the leading choice for president (preferred by 32 percent) with Marco Rubio preferred by 14 percent and John Kasich preferred by 13 percent However, more than one in four (26 percent) are less certain who will get their vote.

Among likely Democratic primary voters, Bernie Sanders is the leading choice for president (preferred by 59 percent), with Hillary Clinton coming in second (preferred by 33 percent. But one in five (21 percent are less certain who will get their vote.

“AARP said early on in the election cycle that Social Security is too critical a matter – and one affecting far too many people – to allow it to be skimmed over, breezed by, or paid only lip service,” said AARP Rhode Island State Director Kathleen Connell. “The presidential candidates need to take a stand on how they would update Social Security to keep it financially strong and adequate for future generations,” she says.

“Unfortunately, Social Security does not seem to be top-of-mind for candidates nor a discussion that finds its way into the debates,” says Connell, observing that some candidates, including some frontrunners, remain silent on the Social Security issue.
(You can get the very latest news and read what candidates with plans did say at http://www.2016takeastand.org.)

Connell says, “The challenge itself – keeping Social Security strong for the future – gets talked about a lot. You can be sure that when a candidate or elected federal official visits a senior center there will be a pledge (one I happen to believe has been sincere in Rhode Island) to protect Social Security.”

“You don’t hear so much about how. The devil is in the details. And, as the saying goes, ‘It’s complicated,’” adds Connell.

Older Voters Have Political Clout

From inside the Beltway, Darrell M. West, Ph.D., Vice President and Director of Governance Studies at the Brookings Institution, considers voters age 50 and over are one of the most important voting blocs in the nation. “It is a numerous group and these people vote in higher percentages than those who are younger. They often are decisive in elections and candidates have to take their views seriously,” says West.

Connell agrees about the clout of older voters. “The average age for a Rhode Island voter in the 2012 presidential election was 48.6, and that was up from 48.5 in 2010. We know that older Rhode Islanders vote in high percentages and we know that the 50+ population is grown as people live longer. But I have to say that when it comes to Social Security, voters 50 and older are united on the issue; they expect some form of accountability from the candidates on how they would lead on this issue, she says.

Anyone who thinks they’re ready to be President of the United States should be able to tell voters how they’ll keep Social Security strong,” adds Connell. “If our leaders don’t act, future retirees could lose up to $10,000 a year. Every year our leaders wait and do nothing, finding a solution grows more difficult,” she says.

Aging issues impact everyone, says Connell. “When I am asked about ‘aging issues it seems to me to indicate how people often default to a narrow view of ageing. Access to and the cost of healthcare is an issue for all ages. Taxation is an issue for all ages. Affordable housing is an issue for all ages. Protecting pensions is an issue for all ages, even for voters working in their 30s or 40s – as is the issue of Social Security. Our aging population presents a challenge to all Americans and I think you will see 50+ voters becoming increasingly liked-minded making more and more of an effort to be heard.”